The former OpenSea manager who was charged with NFT insider trading was convicted on May 3 of wire fraud and money laundering in a New York federal court, according to Reuters.
According to prosecutors, Nathaniel Chastain, a former OpenSea product manager, was in charge of choosing which NFTs would be featured on the website’s non-fungible token marketplace.
After making these decisions, he would frequently purchase these NFTs and then resell them after filing, prosecutors said. He was charged with wire fraud and money laundering on June 1 in connection with these alleged transactions.
OpenSea homepage showing featured NFTs. Source: OpenSea
The trial began on April 24 and has been closely watched by lawyers specializing in cryptocurrency-related issues. Some legal experts have argued that the outcome of the case may affect whether NFTs are considered securities.
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According to the May 3 report, defense attorney Daniel Filor argued in closing trial statements that Chastain was not guilty because he had never been told the information was supposed to be confidential, stating that “Nobody told Nate he couldn’t use or share that information.”
Rather, prosecutor Allison Nichols argued that Chastain knew he was breaking the law. She claimed that he used anonymous OpenSea accounts to make the trades, implying that he was afraid of getting caught.
“She hid what she was doing,” Nichols told the jury in her rebuttal. “He knew that he had violated OpenSea’s confidentiality agreement.”
Related: Crypto Exchanges Address Insider Trading After Latest Convictions
This is the first time a person has been slapped in the face for using insider knowledge to trade non-fungible tokens.
A former Coinbase employee, Ishan Wahi, and his brother Nikhil were also charged with cryptocurrency insider trading in a separate case in July. In that case, Nikhil Wahi pleaded guilty on September 12.
